JOURNAL OF ECONOMICS AND ALLIED RESEARCH
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Impact of Oil Price Volatility on Investment and Human Capital Development in Nigeria
Get PDFThe study examined oil price (revenue) volatility effect on investment and human capital development (measured with gross school enrolment) in Nigeria, using quarterly time series data from World Bank’s development indicator and Central Bank of Nigeria Statistical Bulletin 2013. EGARCH model was used to obtain the conditional variance of oil price (i.e., a measure of oil price volatility) which was employed in ordinary least square estimation. The model was also used to test for volatility persistence in oil price. ARCH test was conducted and discovery of ARCH effect justified the use of EGARCH model. From our results, the persistence effect was found large and significant; implying that volatility in oil price takes a long time to decay. Secondly, results from ordinary least square estimation revealed that oil price volatility has significant positive impact on investment in Nigeria. This implies that any sharp rise in oil price (revenue), stimulates investment through increase in government expenditure, say, on infrastructures, but the reverse happens for any sharp decline in oil price. The results also show that oil price volatility has significant negative impact on gross school enrolment in Nigeria. This indicates that high oil wealth caused by rise in oil price does not permeate the Nigeria education system. Summarily, these findings suggest that, diversification of the revenue base of the Nigerian economy is necessary in order to minimize the consequences of external shocks. Since variations in oil price, significantly influence the level of investment and school enrolment in Nigeria and considering the fact that volatility in oil price may not die out fast. 
THE FAILURE OF SUCCESS HYPOTHESIS AND THE DEMAND FOR DEATH: A CLUE FROM COMMUNITIES IN EDO STATE
Get PDFThe paper attempts to bring to the fall the situation where individuals only live longer and not healthier with the aid of technologies. It examines the extent to which technology in health production has been effective and pioneers a novel demand for death by the patient as way of reducing the burden of disease and cost of illness when disability has already been measured by both instrumental activities of daily living and activities of daily living. It utilizes the purposive sampling technique, with two structured questionnaires for both members of sampled communities and expert medical professionals to test the failure of success hypothesis and demand for death. It finds that even though respondents see our novel demand for death as a remedy to severe burden of disease and cost of illness occasioned by the failure of success – as validated by the paper - the fear of death and some beliefs about eternity create skeptics for this remedy. However, the experts succumbed to the remedy and that medical assistance may be needed to make death less painful, peaceful and minimize the cost of dying
DEPENDENCE ON OIL: WHAT DO STATISTICS FROM NIGERIA SHOW?
Get PDFMany economists have raised cogent concerns regarding the economic stability of Nigeria, given the volatility and in recent times, the decline in oil prices. Since the discovery of crude oil in commercial quantity in Nigeria in 1956 and the attendant oil boom in the 1970s, oil has been the thought and the talk of the country chiefly because of its associated quick and huge returns. The nation by way of dependence on this black gold has experienced rapid economic growth though in an inconsistent manner: this can be attributed to the volatility in the price of the crude oil upon which the country leans. This paper shows how volatility in oil prices engenders inconsistency in economic growth visà-vis oil production and oil exports. Secondary data from 1993 to 2015 and descriptive tools were used to assess this and it was found that there exists a positive correlation between oil dependency and inconsistency in economic growth in Nigeria. Growth was attained as a result of high world oil prices; however, due to volatility in oil prices and failure of the country to industrialise and diversify the economy from its monocultural nature, such growth tends to be volatile. It was, therefore, recommended that a forceful and pragmatic diversification, chiefly towards the manufacturing sector, is the key to an increased and a sustainable economic growth
PRESIDENTIAL ELECTION AND ECONOMIC ACTIVITIES IN NIGERIA: IS THERE AN EMPIRICAL NEXUS?
Get PDFThis paper examines the empirical nexus between presidential elections and a host of macroeconomic variables in Nigeria in order to determine the effects of pre-election (preelection dummy) and post-election (post-election dummy) on economic activities in Nigeria in the new democratic era spanning 1999-2015. Employing OLS econometric techniques, the empirical results reveal that presidential elections have a significant effect on economic activities in Nigeria. In particular, the results, using Nigerian data, show that pre-election and post election have significant influence on stock market, gross capital formation (proxy by gross domestic investment), government expenditure and inflation. The impact of pre-election and post-election on real GDP (a measure of economic growth) is positive though insignificant. Therefore stable political environment must be put in place that guarantees credible elections. Importantly, it needs to be supported with sound institutional structures and macroeconomic policies that enhance rapid economic growt
THE SHARING OF COSTS AND BENEFITS OF REGIONAL ECONOMIC INTEGRATION IN THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS)
Get PDFThe objective of this paper was to compare the distributions of costs and benefits of economic integration in the Economic Community of West African States (ECOWAS). In other words, it sought to evaluate whether the distribution of benefits corresponded to the distribution of costs among the member states of ECOWAS over the study period, 1975-2014. The cost of interest in this study was the contribution of each member state to the budget of ECOWAS while the benefit of interest was the level of intra-ECOWAS exports of each member state. To facilitate the evaluation, the distribution of percentages of member states’ contribution to budgetary revenues were calculated and tabulated. Similarly, the ratios of intra-ECOWAS exports to GDP and total exports of member states were calculated and tabulated. The findings revealed that (i) Nigeria accounted for 77-82 per cent of ECOWAS budgets, followed by Cote d’Ivoire with 4-4.6 per cent, Ghana with 3-6.3 per cent and Senegal with about 2.0 per cent; (ii) in terms of the distribution of the ratio of intra-ECOWAS exports to total exports of member states, Nigeria’s performance was 4.4 per cent as against Cote d’Ivoire’s 28.2 per cent, Ghana’s 6.6 per cent, Guinea’s 26.8 per cent, Niger’s 22.7 per cent and Senegal’s 20.3 per cent; (iii) overall, the distribution of benefits was not consistent with the distribution of costs of integration; and (iv) responsible for the non-correspondence between the distributions of costs and benefits of integration was the adoption of a common currency by the members of the West African Economic and Monetary Union (WAEMU). It was recommended that the sources of fund be increased and the same percentage coefficient of contribution be adopted for all member states to make for equity and continued existence of ECOWAS. Differences in member states’ contributions to ECOWAS budgets should come from differences in the tax base.  
FINANCIAL LIBERALIZATION AND BANKING SECTOR PERFORMANCE IN NIGERIA
Get PDFThis study investigates the impact of financial liberalization on bank performance in Nigeria employing time series quarterly data spanning 1981-2012 using the ordinary least square (OLS) technique. The empirical result revealed that liberalized variables significantly impacted the performance of banks through increase banks profit. The results specifically reveal that liberalization of the variables of interest which are interest rate and lending rate enhances bank performances. The study then concluded that financial liberalization significantly and positively affects bank performance in Nigeria. In view of this, it was recommended among others that the government should pursue and sustain the policies of financial liberalization in order to enhance the competitiveness and efficiency of the Nigeria banking sector through appropriate institutional framework
INVESTMENT, OUTPUT AND REAL INTEREST RATE IN NIGERIA: AN ARDL ANALYSIS
Get PDFThis paper investigated the impact of Output and Real interest rate on Investment in Nigeria between the years 1981-2014 employing the Autoregressive and Distributed Lag (ARDL) model approach to cointegration. Stationarity of the variables were accounted for using the Augmented Dickey-Fuller (ADF) and the Phillips-Perron (PP) Unit Root test. Our findings reveal the existence of long run relationship among the variables. The result also reveals that in the short run, a one period lag of GDP has a positive and significant impact on Investment while a one period lag of Real interest rate has a negative but no significant impact on Investment. The result also shows that Foreign Direct investment inflow has a positive and significant effect on Investment in the short run while Exchange rate do not have any significant effect on Investment. It is therefore recommended that policies tailored towards the attraction of FDI into Nigeria should be encouraged. Policies which may include the improvement of enabling environment for business, development of critical economic infrastructure and the provision of sufficient power grid for companies. Economic policies should also be implemented in favor of output growth such as policies aimed at increasing aggregate demand which can be achieved through expansionary monetary policies which cuts interest rates in the banking system. Borrowings for investment and consumption rises which also leads to a rise in output which would in turn lead to a further increase in Investment in the country
THE POLITICAL ECONOMY OF OIL REVENUE ACCOUNTING AND FISCAL ALLOCATION DISPUTES IN NIGERIA’S FOURTH REPUBLIC
Get PDFNigeria as a resource-rich country relies hugely on oil revenues for her sustenance. One of the major contentious items in her federal structure is the revenue sharing and allocation formula. Having been the primary issue in her political stability as a nation, none of the formulae evolved at various times in almost six decades of nationhood has gained general acceptability among the federating units. This paper examines how the management of Nigeria’s oil revenues has been implicated in the recurring fiscal allocation disputes in the country since the advent of the fourth republic. Relying on the rentier state theory, the paper highlights the various disputes between and among the states, and between the states and the central government. It recommends a revisiting of the law which gives the central government enormous powers, to the detriment of oil-host communities and others who should be direct beneficiaries of Nigeria’s oil wealth
RESERVE DEMAND AND MANAGEMENT IN NIGERIA
Get PDFThis study stems from the depletion of Nigeria’s Reserves in recent times and its implications on the desirability or otherwise of holding Reserves as embedded in her Reserve Management Strategy. A Reserve demand function was developed using a simultaneous equation model and it was found that the opportunity cost of holding Reserves negatively and significantly affects Reserve holdings. The IMF condition and Guidotti-Greenspan condition for Reserves Adequacy were significant determinants of Reserve holdings, other factors included previous values of Nominal Exchange Rate, Trade Openness and the Capital and Current Account Vulnerability. Conclusions drawn were that the decision to hold Reserves is motivated by the return on Reserves and an account of the Short Term Debt by Reserves. It was also found that there is no complementarity in the interdependency between Real GDP and Foreign Exchange Reserves. Recommendations rendered were that the Federal Government should review her Exchange Rate policy in order to reduce the bearing of exchange rate management on Reserves depletion, and that the excess on Reserves should be spent on improving the investment climate in order to balance the complementarity expected of the economy’s size and Reserves accumulation
THE IMPACT OF MACROECONOMIC UNCERTAINTY ON FOREIGN INVESTMENT INFLOWS IN NIGERIA
Get PDFThe study estimates the effect of macroeconomic uncertainty on foreign investment inflows into the Nigerian economy. An annual times series data spanning the periods of 1970 – 2013 was used to specifically estimate the extent to which macroeconomic uncertainties have affected foreign direct investment (FDI) and foreign portfolio investment (FPI) inflows into the Nigerian economy. Also estimated was the price elasticity of macroeconomic uncertainties on foreign investment inflows. The estimation model adopted for the study follows the Real Option theoretical framework. The study further adopted an Error Correction Model (ECM) after confirmation of the long-run relationship between macroeconomic uncertainty variables and foreign investment indicators in Nigeria. The major findings from the study is that macroeconomic uncertainty variables included in the model, such as variability in consumer price index (INF), the ratio of total external debt to GDP (RDT), cost of capital, Political uncertainty/government commitment variable (POL) and the variability in the real effective exchange rate (RER) have significant and negative long-run effects on foreign investment inflows into Nigeria, especially the foreign portfolio investment. Also our findings revealed that domestic market size and the ratio of value of total export of goods and services to GDP (TXP) have positive and significant long-run effects on foreign investment inflows into Nigeria. The study further found that a unit increase in cost of capital will force FDI inflows to reduce by 80% and FPI to reduce by approximately 35% in Nigeria, when other factors were fixed. The study therefore recommended that to boost the confidence of foreign investors, the government must show increased commitment in creating favourable investment climate, by reducing the increasing macroeconomic uncertainty and policy inconsistencies in the system, in order to alleviate possible fear of expropriation